Domestic Supply Is Expected to Outpace Demand
China could sharply reduce its advanced-chip shortage during the next decade as domestic foundries expand production. Goldman Sachs projects that supply from processes measuring 7 nanometres or below will grow much faster than local demand. However, equipment limitations may still prevent the country from achieving complete semiconductor independence.
Advanced-node wafer supply is expected to increase at a 46 per cent compound annual rate between 2025 and 2035. Domestic demand is forecast to grow by 17 per cent annually during the same period. This difference would substantially narrow the current imbalance between available chips and market requirements.
SMIC Capacity and Production Yields Drive the Forecast
Goldman expects the supply gap to fall from 92 per cent in 2025 to 34 per cent by 2035. By then, China could produce 410,000 advanced-node wafers each month against demand for 619,000. The country would therefore remain below self-sufficiency, despite a major expansion in domestic output.
The forecast depends heavily on Semiconductor Manufacturing International Corporation, China’s largest contract chipmaker. Goldman’s model assumes SMIC adds between 30,000 and 50,000 wafers of monthly capacity each year from 2026 through 2031. Annual additions would then slow to another 20,000 wafers of monthly capacity through 2035.
Improving Yields Cannot Remove Every Bottleneck
Production efficiency is also expected to improve considerably. SMIC’s advanced-node yields are projected to rise from 23 per cent in 2026 to 50 per cent in 2030. They could reach 75 per cent by 2035, increasing usable output from each batch of wafers.
Nevertheless, a large efficiency gap would remain. Taiwan Semiconductor Manufacturing Company can achieve yields above 90 per cent, depending on chip design and die size. Meanwhile, China’s weakness in lithography equipment remains the main obstacle to full independence, even as capacity and yields advance.
References
Liu, H., & Liu, H. (2026b, agosto 24). China’s advanced chip supply to surge by 2035 despite equipment bottlenecks, Goldman says. South China Morning Post. https://www.scmp.com/tech/tech-trends/article/3365074/chinas-advanced-chip-supply-surge-2035-despite-equipment-bottlenecks-goldman-says?share=gOaQ%2BrjF7c8Npxcw6iOOFYUyfh51wHrvtiIer2Pob3%2BdcsJBLLpjJI46wXH3X%2BjdeLftWRHgeEKAtIzlyxnsc8srEaBc5w3gC%2FDT%2F639syc%3D&utm_campaign=social_share